John Maynard Keynes (person)

Like many books of great importance, Keynes's The General Theory of Employment, Interest, and Money was a convoluted, almost incomprehensible tome. However, the ideas contained inside caused a revolution that changed the world.

Keynes' book was published in 1936, at the height of the Great Depression. The world was facing the biggest economic slump ever to have occured, employment was nearly nonexistent. The economists of that time, blindly following the laissez faire doctrine, maintained that nothing could be done. The economy, they chorused, would magically right itself. Employment, after all, was available to those who were willing to accept lower salaries; as low as the market demanded. The government would do well, they advised, to leave the economy alone.

Keynes, however, believed otherwise. The problem, he said, was aggregate demand. When the demand was high, laissez faire economics worked. When it was low, however, the economy would enter into a devastating spiral: the economy was bad, so people would spend less. Because people spent less, the economy would worsen, and because of that people would spend even less.

The only way out of this, Keynes preached, was increasing the aggregate demand. And the only institution that could increase this demand was the government. Keynes believed that to save the economy, the government had to spend a lot of money, never mind if it would incur a large public deficit.

Keynes quickly converted his fellow economists to his radically new ideas. By 1946, much of the world (those who were not communist) had embraced keynesian economics, and the US passed the Employment Act of 1946, affirming the commitment of the United States government to a high employment rate.

It was also in 1946 that Keynes, the most influential economist of the 20th century, died.